Question: As a project manager, you have been asked to evaluate the feasibility of the following proposed acquisition: Your organization is considering the purchase of an
As a project manager, you have been asked to evaluate the feasibility of the following proposed acquisition:
Your organization is considering the purchase of an automated OB/GYN documentation system.Proposed costs are as follows:
| Hardware | $ 250,000 |
| Software | $ 400,000 |
| Software maintenance | $ 65,000 |
| Training | $ 35,000 |
| Implementation | $ 75,000 |
Software maintenance will start after one year and will be incurred annually.All other costs are incurred in the first year.
Your analysis projects the following benefits to be expected annually:
| Labor savings | $ 220,000 |
| Equipment savings | $ 55,000 |
| Reduced malpractice premiums | $ 20,000 |
| Increase in OB business | $ 50,000 |
Construct a table showing the investment, and showing annual benefits for five years.
Use a discount rate of 5%.
Use an assumed inflation rate of 4%.
Show the Net Present Value and the Internal Rate of Return of the proposed investment every year for five years.
Are any of the benefits operational, or should some benefits be considered tactical or strategic benefits?
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